Glossary · Doing the deal
Short sale
In short
The sale of a property for less than the amount owed on its mortgage, with the lender's explicit permission. A past short sale is a negative item on your credit history, signaling prior financial distress.
What it means in a deal
While generally less damaging than a foreclosure, a short sale still indicates past financial difficulty and will be noted on your credit report. Be prepared to clearly explain the circumstances surrounding the short sale to your lender and demonstrate how your financial stability has improved since that event. Transparency is key.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Short sale
- How does a recent personal foreclosure or short sale on my home affect SBA 7(a) loan approval?
- How does the SBA handle a short-term deferral of principal payments at the start?
- Can I use an SBA 7(a) loan to cover short-term operating expenses for my business?
- Can a short-term personal loan from a relative, repaid before closing, count as my equity injection?
- What happens if the business's current lease agreement for its premises is short-term or expiring soon?
- What specific lender actions or omissions can lead to a repair of the SBA guaranty, short of a full denial?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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